Chile’s LCCs JetSMART, Sky, spread across Latin America

It's been close to two years since JetSMART introduced the ultra low cost model in Chile's domestic market, and data from the Chilean government show that between 2016, prior to JetSMART's launch, and 2018, domestic passengers in Chile grew by 2.6 million.

JetSMART's passenger share grew to 12% in 2018, giving the airline a solid position in a market long dominated by two airlines - LATAM Airlines Group and Sky.

Sky essentially maintained its passenger share during that two year time period, and LATAM remains the dominant airline by a wide margin, but its share did decline. JetSMART has maintained that its strategy is passenger stimulation, and the data give some credence to those assumptions. However, pricing in the country's domestic market is likely under pressure now that a third major carrier has established itself in Chile.

Both Sky and JetSMART are now expanding outside of Chile, Sky is launching a new LCC subsidiary in Peru and JetSMART has joined a growing list of low cost operators in Argentina. That expansion reflects their respective views that numerous opportunities exist for the low cost model in South America.